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Freelance IT workers launch 'No to Retro Tax'

A new campaign against retrospective taxation by individuals and families affected by Section 58 of the Finance Act 2008, which threatens bankruptcy for thousands of IT contractors, has been launched.

With the issue of retrospective taxation burning in Whitehall, the campaign has approached MPs on the Treasury Committee to ask whether “all the facts” were available when S58 (known as ‘BN66’ after its budget notice) was backdated.

Although No To Retro Tax admits that both the judicial review and court of appeal hearing into the legislation backed the retrospection, it believes HMRC’s recommendation was accepted without the “full background”.

Highlighting three areas which it says were overlooked when the bill was originally passed, the campaign has written to the committee to ask whether parliament was “furnished with all the facts” when HMRC made its case.

It believes the details kept from parliament meant it was unable to make an “informed judgement” when the taxman pressed to retrospectively amend an Act of Parliament dating back to 1987.

Campaign chair Alistair Renshaw reflected: “The principle of retrospection – that someone can be punished for doing something that was perfectly legal and acceptable at the time – is wrong, particularly when it is done against Parliamentary and HMRC protocol.”

As a result, the retrospective elements of S58, notably section four, should be amended, with the effect of the Finance Act being brought in line with the Rees Rules and HMRC protocol.

Individuals and families affected – “victims" - would then be able to challenge the changes in the tax courts, the campaign explained, but the retrospective application of the legislation currently prohibits such recourse.

“Retrospection is unfair and [we] are calling on Parliament to amend Section 58(4) of the Finance Act 2008 to remove the retrospective elements that will push innocent people to bankruptcy for following the law as it existed at the time,” No To Retro Tax said.

In line with the Treasury Committee last week, it called for ministers to carry out “due diligence” on the issue of retrospective taxation, and wants “greater consideration as to whether retrospection is the best way of achieving legitimate policy aims.”

“With the current political climate against perceived ‘tax dodgers’, HMRC is entirely within its right to close down tax planning schemes or loopholes that no longer work properly or go against the intentions of Parliament,” Mr Renshaw said.

“[However retrospective taxation] undermines confidence in the rule of law and creates uncertainty about the UK as a place to invest and do business.”

No To Retro Tax describes itself as a self-funded, voluntary group comprised of property developers, healthcare workers and freelance IT engineers.